Russia’s full-scale invasion in 2022 has had a devastating impact on Ukraine’s health system. The war has brought about mass displacement of people, exacerbation of existing high-burden diseases, introduction of previously uncommon illnesses, mental health issues, health care worker burnout and displacement, destruction of infrastructure and supply chains, and a large fall in household and state income. As of the end of February 2023, over 18 million people had left Ukraine, 11,756 had been injured, 7,199 killed by the conflict, and 769 attacks on health care had been verified (WHO 2023b). And while the war is an opportunity to reform in a way to enable ‘leapfrogging’ of the healthcare system, potential threats to this include ongoing economic impact (unemployment, devaluation of Hryvnia), low human resource capacity, dependence on international donors and non-governmental organisations with multiple parallel systems, distortion of health worker salaries, inequity in health service provision across the country, and potential decrease in trust in government over time (WHO 2023a).
In this column, based on our chapter in the first ‘Paris Report’ from CEPR (Gorodnichenko et al. 2022), we put forward our proposals for building back the Ukrainian healthcare system. We advocate changes to the financing, delivery, and governance arrangements of the existing system. International aid and resources devoted to Ukraine’s recovery should be used to leapfrog and modernise, rather than replace, the existing healthcare system and infrastructure. This would enable the system to deliver care more efficiently and to meet the goal of universal access to affordable and high-quality care. This will need large investments in human capital, ways of working, and governance arrangements, on top of changes to build back the physical capital stock.
Background
Any reform to the Ukrainian health care system has to take as its starting point not just the current healthcare situation brought about by the war, but the legacy of the Soviet system and the reforms that were started prior to the Russian invasion of 2022. At the time of the full-scale invasion, around 7% of GDP was spent on healthcare. However, while this total expenditure is in line with other countries with similar GDP, an important feature of Ukraine’s pre-war healthcare system was that around half of these payments were direct payments made by healthcare users, mainly out of pocket and often ‘under the counter’ (Goroshko et al. 2018), ironically within a system in which over a third of the population believes that all healthcare should be free (Rating Group of Ukraine 2020). On the delivery side, the legacy of the Soviet system is a system with too many beds, poorly trained staff, low salaries, medical staff who are immobile and at the mercy of hospital directors, a weak public health sector including GPs, and lack of patient voice. This is against a backdrop of poor population health even before the war, due in part to factors outside the health care sector, such as work conditions, the physical environment, and poor diets. Ukraine’s population health compared poorly even with other comparator post-Soviet countries (World Bank and WHO 2021).
In 2017, a reform package was implemented to tackle some of these issues. The main elements of the 2017 package were: (i) registration of individuals with a single family doctor (involving the introduction of electronic registration systems), (ii) strengthening the role of family doctors to deliver care at a community level and act as a gatekeeper to hospital based care, (iii) a defined benefit package (a specification of medical services fully funded by the state), (iv) greater competition in provision and greater autonomy for hospital managers, and (v) a payment based on activity level rather than the allocation of budgets based on last year’s expenditure and political negotiation. Financing continued to come from general taxation. While there was some discussion of healthcare cost-sharing between patients and the Government (in the form of co-payments or co-insurance), no formal changes were made.
Whilst these components follow a commonly adopted reform model (WHO 2010) – such as that of the UK or Nordic states – on the eve of the full-scale invasion there were some aspects of the reforms that had made little progress. The benefit package was not well defined (a common situation in many post-Soviet countries) and there had been relatively little progress towards greater competition in provision or upskilling of staff. The important step of providing hospitals with an autonomous status with extensive financial and managerial flexibility was not accompanied by adequate measures to ensure accountability, resulting in a backlash against autonomy and attempts to reinstate central control (WHO 2023a). The extensive use of out-of-pocket payments continued and the strategic purchasing agency – the National Health Service of Ukraine – originally intended to play a key governance role, basically had a passive role as a single payer.
Against this backdrop, what is the way forward? First, we need to use the lessons from other post-conflict situations. Ukraine is not unique in having its healthcare system destroyed by conflict, and there is growing understanding of how to reform healthcare delivery and financing in conflict-affected contexts to strengthen the health system and improve sustainability and resilience. Key lessons are that crises are often protracted and there is no distinct moment where humanitarian aid ceases and development begins. Thus, the United Nations system’s ‘new way of working’ emphasises consideration of health system strengthening from the beginning of humanitarian response (the so-called ‘humanitarian-development-peace nexus’) (OCHA 2017). Analysis and planning post-conflict need to be done jointly with the government centrally coordinating all the actors and the use of non-conditional cash transfers. The components of successful reform include an agreed package of health services (in line with Universal Health Coverage and Sustainable Development Goals) that can encourage equity in service provision and that more resilient services are decentralised, community-based, and patient centred. The present high capacity and legitimacy of the government in Ukraine make these lessons easier to implement, despite the war’s devastating effect on health and the healthcare system.
Second, in 2022, the Ministry of Health (MoH) in Ukraine published its strategy for the next ten years. This was to continue the implementation of 2017 reforms. The report provided indications of specific areas of healthcare where outside financing could be provided, though it was envisaged that most financing would come from the government.
Our proposals
We support this direction of travel but propose that the war be used as an opportunity to make bigger changes, allowing the system to ‘leapfrog’ rather than continuing business as usual and to make the system more resilient to potential future shocks. In addition, the lessons from other post-conflict situations need to be incorporated into efforts to strengthen the system.
Our proposals focus on those key areas of finance, delivery, and governance of the healthcare system that we feel are under-addressed in the Ministry of Health plans, or need changing, to achieve goals of sustainability and resilience.
Financing proposals
Financing of the health system will rely heavily on funds from overseas for the foreseeable future. Domestically, there is a current lack of finance and even if modest economic growth resumes this year, the fiscal position will remain tight in the medium term (IMF 2022). In 2022, consolidated budget revenues excluding international aid were barely enough to cover defence and security spending, which reached 48.4% of total expenditure. Even if military spending subsides, domestic revenues will be insufficient to fully cover non-security functions including health.
Given the scale and importance of the international aid for supporting both health system reconstruction and service delivery, these funding mechanisms will require specific governance arrangements. It is essential that international aid for health system reconstruction be channelled through a single independent agency that is aligned with Ukraine’s objectives. Healthcare services need to continue to be purchased through the National Health Service of Ukraine (NHSU), requiring a relevant arrangement for direct budget support, possibly with some form of earmarking and conditionalities.
And even with support from overseas, the amount of available funding will be limited. The Ministry of Health projections of public spending of 3.5% of GDP in the short term and 7% of GDP in ten years’ time may imply a decrease in funding if the economy does not significantly improve. This has implications for the capacity of the healthcare system to provide services, and linked to this, the benefit package, as well as the role of private payments including out-of-pocket direct payments.
First and foremost, the benefit package needs to be defined more explicitly. How generous the package can be in terms of breadth and depth of coverage is both technically and politically challenging. It also depends on how much of the funds coming into Ukraine can be used for the healthcare sector. These are essentially political decisions and difficult ones, but they are not solved by vagueness around what can be provided by the state. A lack of a clearly defined benefit package results in implicit rationing and, once resources get tight, in individuals seeking other ways of getting healthcare, including through out-of-pocket payments. This increases inequality in access and outcomes and reduces trust in the ability of the system to deliver. It can also lead to richer individuals exiting the system and being less willing to pay taxes to support it, risking a spiral in which the healthcare system becomes a ‘poor service to the poor’.
One option for increasing the finances for healthcare is use of greater cost-sharing at the point of delivery. This is often proposed as a means of increasing funds for healthcare provision, but can also be used to reduce utilisation. We do not support greater use of cost sharing in the short and medium term. Cost-sharing will hit those who need healthcare the most the hardest. If the government seeks to mitigate this through exemptions, financing these would require a considerable additional investment. At the same time, in practice the system will raise relatively little funding since reducing financial risks would require co-payments to be modest, flat, universal, and limited with annual caps (WHO 2019). The second argument in favour of using cost-sharing to direct utilisation becomes redundant, as utilisation is already directed through the primary care ‘gatekeeper’. In addition, in the Ukrainian context, costs-sharing is likely to perpetuate the use of payments by individuals to ‘exit’ the system and weaken public support for the public system.
However, we do advocate increased use of so-called ‘sin’ taxes (taxes on tobacco/alcohol/sugar drinks/saturated fats). Whilst these may raise relatively little money and can be regressive depending on their design, they are an important signal to the population that individuals need to change their consumption behaviours to promote health.
Finally, the level of expenditure is a political decision and will depend on trade-offs between different government priorities. The links between health, income, education, and the work and physical environments means that investments in other public services and some kinds of infrastructure, for example, greener cities, will also bring health benefits. Thus, we advocate that such investments include health benefits in any assessment of their cost-benefit ratio.
Delivery
There are several key principles that should underpin any delivery side changes. These are: (i) a greater emphasis on multidisciplinary care, (ii) greater prioritisation of public and community health including mental health, (iii) emphasis on patient centred care, (iv) greater patient voice to support the system, partly to counter the dangers of exit that arise when financing will be low, (v) and that individuals need to become more responsible for own health.
In terms of physical capital, the rebuilding of destroyed infrastructure should not simply seek to reproduce what was there before. Instead, rebuilding plans should address the fact that Ukraine had, at the start of the war, relatively too much hospital provision, some of low quality, and too little specialist provision and community provision. The use of IT and electronic health records (her) should be accelerated, building on the base established before the war.
In terms of human capital, the Ukrainian healthcare system is faced with a displacement of workers and world-wide nursing shortages. Given this, there is a need to ‘retain and retrain’ human resources to address shortages and quality. This will involve both programmes to upskill staff, the increased use of task-shifting for nurses and in treatment of chronic illnesses (where supported by evidence), and investment in managerial quality and greater autonomy for management.
Governance
Good governance is a crucial component of healthcare reform. Governance challenges are common in crisis-affected settings with an influx of various actors – non-governmental organisations (NGOs), UN agencies, donors – who all have different mandates, expertise, and agendas. This can lead to the creation of poorly coordinated and parallel systems, fragmentation, and ultimately erosion of the central authority’s leadership and objectives.
An immediate action to support good governance is that external funding should be channelled through a central agency that is independent of the donors (e.g. the European Bank for Reconstruction and Development). There should be the establishment of an independent agency strongly linked to the central national agency (central government and/or Ministry of Health) to direct use of funds from overseas donors, be they governmental, NGOs, or private. This role would ‘sunset’ if/when Ukraine joins the EU.
The central purchaser role should be retained, making it easier for donor agencies to step back, but alongside this there should be the development of a strategic agency for healthcare. While originally envisaged in the 2017 reforms, this was not realised. The creation of a strategic agency is a political as well as technical decision, but the priority actions should be to retain central pooling and distribution of funds to achieve spatial and other equity goals, to resume and accelerate development of payments for care, and to develop and publish performance indicators for the central agency and all healthcare providers that can be used in budget negotiations, to help foster user choice and to increase accountability.
References
Gorodnichenko, Y I Sologub and B Weder di Mauro (eds) (2022), Rebuilding Ukraine: Principles and Policies, CEPR Press.
Goroshko, A, N Shapoval and T Lai (2018), Can people afford to pay for healthcare? New evidence on financial protection in Ukraine, WHO Regional Office for Europe.
IMF (2022), "Program monitoring with board involvement" press release; staff report; and statement by the Executive Director for Ukraine, 21 December.
OCHA (2017), New way of working, UN Office for the Coordination of Humanitarian Affairs.
Rating Group of Ukraine (2020), “Assessment of Healthcare: survey results”, 3 September.
Thomson, S, J Cylus and T Evetovits (2019), Can People Afford to Pay for Healthcare? New Evidence on Financial Protection in Europe, Report by the WHO Regional office for Europe.
WHO (2010), Implementing health financing reform: lessons from countries in transition, World Health Organization, Regional Office for Europe.
WHO (2019), Governance for strategic purchasing: An analytical framework to guide a country assessment, World Health Organization, 19 December.
WHO (2023a), Budget execution in health: case study: Ukraine, World Health Organization, Regional Office for Europe.
WHO (2023b), “War in Ukraine: situation report from WHO Ukraine Country Office”, Issue No. 45, 15 February.
World Bank and WHO (2021), Health Financing Reform in Ukraine: Progress and Future Directions.
